This is part of a long article by Ivan Rogers in Prospect magazine, given in Glasgow this week. The full article can be read here . It sets out in detail his account of how the EU will approach the negotiations on a trade deal on the assumption that a Johnson government does not want regulatory alignment (indicated by the removal of that phrase in the political agreement). The article is well worth reading and attending to because it examines in forensic detail the actual nature of the negotiations by one who knows how they work
by Ivan Rogers / November 25, 2019
e) What does the coming year hold: will we get there?
As if all this inevitable complexity is not enough, the transitional period, originally conceived of as 21 months long – itself thought too short for the negotiating purpose by virtually all experts – has of course shrunk in half.
Even if we assume PM Johnson, with an overall majority, gets the Withdrawal Agreement through by the end of January 2020, just 11 of the originally planned 21 months are left.
So let’s be heroically optimistic, and say that, within, say 6 weeks of the passage of the Withdrawal Agreement Implementation Bill, the EU side can reach unanimous agreement – and unanimity is required – on what it wants from the negotiations.
Let’s be even more heroically optimistic and say that the UK Cabinet can sign off on the same timescale on an agreed account of what it wants from the negotiations, which is more serious than just a pious shopping list of demands for a Single Market level of rights without any of the obligations, which the other side, for both the legal and substantive reasons I have explained, immediately dismisses as for the birds.
We then have about 9 1⁄2 months from, say, mid March next year, to negotiate, conclude and ratify the entire deal.
And to be clear, ratification, to permit entry into force, unlike on the Article 50 process we have lived for the last few years, will entail ALL national Parliaments passing the deal.
Which is no easy bar to jump. As indeed the Canadians found out in both Wallonia and—over migration issues—in Romania and Bulgaria.
Why? Because it is inconceivable that the EU 27 will agree a deal with the U.K. under sole European Commission authority—or competence, to use the EU jargon.
And we cannot very well abuse European nation states for that because it was always a cardinal objective for British Governments when we were in the EU to ensure that national administrations and legislatures retained rights in the conclusion and ratification of all trade deals.
Oddly enough, many others agreed with us—on sovereignty grounds. And several of us in the Council even took the Commission to Court over the EU-Singapore free trade deal over this precise question.
One can always provisionally apply the EU competence elements of a deal which has yet to be ratified everywhere. But we have to be in no doubt that the trade deal will require full Parliamentary ratifications everywhere else, not just here.
One cannot—more’s the pity—easily reap a quick, balanced “early harvest” of good things which do not need ratification by everyone else.
The political implications of this are completely obvious on issues like fisheries and food standards, which are every bit as politically contentious elsewhere as in the U.K.
And again, a deal here with us, post our exit from the Common Fisheries Policy and the Common Agricultural Policy is—self-evidently—much harder for the EU than one with Canada because it’s of much greater consequence for both sides.
I am not saying—never have said—that no trade deal of any sort is possible next year.
I AM saying, as I was well over 3 years ago, that a serious, wide coverage, FTA cannot and will not get done in that time. And I know no-one the other side of the Channel who thinks otherwise.
The major threat for the U.K. as I see it, is therefore not that nothing at all gets done next year.
But that, because we are under immense time pressure, and known to be desperate to “escape vassalage” by the end of 2020 – something to which the Prime Minister daily keeps committing, and the Tory manifesto commits – the EU side just sees a huge open goal opportunity and repeats its playbook from the Article 50 process.
After all, it thinks it worked really rather well. It’s rather hard to argue that tactically it didn’t…
So it entirely dictates the contents and pace of what does get done, runs the clock down towards the next cliff edge, and confronts a desperate U.K. Prime Minister with a binary choice between a highly asymmetrical thin deal on its terms, and “no deal” towards the end of next year.
If all the time pressure is on him, you can safely assume he will make a lot of concessions in the endgame, and yet still have to emerge blinking into the light claiming victory.
If the EU can then button down in legally binding form what it feels it most needs out of a deal on that timescale, then it may feel “job done”: its members are scarcely going to want to have to negotiate, then ratify a whole series of further deals with the U.K. thereafter, if they feel their key objectives have already been secured.
As the U.K. discovered—much too late—in the late Spring of 2017, in the Article 50 process it had unwisely triggered without understanding or negotiating how it would play out, once the 27 set their negotiating directives in stone, those very largely dictate the scope and ambition of the negotiation which unfolds.
The same is highly likely to happen with this more complex negotiation.
There are very big elephant traps here for the U.K Prime Minister in 2020. He is currently digging them deeper.
The EU is acutely conscious that, in order to have more than the 9 months or so I described in which to negotiate, the UK Prime Minister would have to decide he needed an extension of the transition period by no later than July 1st, 2020.
This date is in the Withdrawal Treaty. So it’s not a date which can be shifted except by a Treaty change. There is no serious prospect of any such Treaty change, as that too would require national ratifications.
So, as often in this process, markets, the media and the wider private sector are much too complacent that some means of kicking the can down the road and substantially extending the negotiating process would be found, if there were a majority Johnson Government, with 5 years ahead of it. That looks very problematic to me.
I also struggle to see PM Johnson wishing to extend.
It’s not primarily that it would involve a screeching U-turn from what he is promising the public and Party now.
He after all has just executed one of those on the backstop question by doing a deal for which he would have excoriated his predecessor for giving way on fundamental principles of constitutional integrity.
The EU noticed that, noticed with some admiration that he nevertheless could sell a Withdrawal Agreement when Mrs May couldn’t – and they frankly never believed she could—and that is why, given he had dropped overnight the stuff on “alternative arrangements” at the Irish border which they viewed as hogwash, they were prepared to jump to the frontstop solution to replace the backstop, despite real qualms as to how on earth you make it operable.
But I think the EU collectively concludes from this that, come the end of 2020, the same story will play out, and that he can be induced to sell a deal stacked in their favour as a U.K. negotiating triumph, if only in order to have done with the issue politically. Or to find a different way to extend purgatory.
But on the question of whether to extend, he surely is most unlikely, just 3 months after the potential start of negotiations, already to have reached the conclusion by June that the following 6 months will not suffice.
He also knows that the moment he extends, he will be straight into a new budgetary negotiation about the U.K’s contribution over the 1 or 2 years of an extension. Which might involve eating lots of words. He further knows that the Right, which will have been strengthened inside his Party if he has won the election, will decry an extension as an intolerable prolongation of vassalage.
I should be very clear indeed here: my point is not – absolutely not – to welcome this thinking on either side of the Channel.
Far from it.
I fear it all points to a repetition next year of exactly the syndrome we have suffered for the last three. And a repetition of the myopia on which ultimately lands us with a poor and deteriorating relationship on multiple things that really matter, economically and strategically.
I am just stating the likelihood—I personally frankly think near-certainty right now—that the incentives on both players now play out this way.
Put crudely, the EU will feel that, in the time available, rather little serious can get done, and will think that is no bad thing, as it can fully exploit UK desperation to get something over the new line. Why not take advantage of yet another Prime Minister who has unwisely boxed himself in?
They are talking up a deal, not because they have become undying fans of Brexiteers but because they can see there’s an opportunity here for something that works pretty nicely in the EU’s interest.
The U.K. will think that the overwhelming political objective is to deliver “full exit” by the end of 2020 (let’s forget the little local difficulty that you told the public that you were “getting Brexit done” the year before.)
So a quick and dirty deal, with precious little substance beyond zero tariffs and quotas has appeal, despite the economic reality that the vast majority of the barriers to trade which we need to keep dismantled are the non-tariff ones. And despite the obvious face that a tariffs and quotas only deal is obviously more in, say, French and German interests than our own
We could, as in the Spring of 2017, be on tramlines to this rather rapidly.
Put another way, the jelly will be setting on a potential endgame in 2020 as soon as the EU negotiating mandate starts to appear in print. That is now only just over 3 months from today. Reality does come at U.K Prime Ministers rather quickly these days. I will come back to this in a minute.
f) The road to Christmas 2020 – how it might look from Brussels
More specifically, though, how do I believe the EU might aim to organise next year? And why do I believe there will be a major crisis before the end of 2020?
The EU’s methodology will, exactly as in 2017, be essentially to say to the U.K. that it is our own red lines which have entirely governed the ambition—or lack of it—in their negotiating mandate.
So, they’ll say: we accept, as we always said, from Tusk and Juncker level from early autumn 2016, that if you want divergence and disalignment, a relatively “thin” FTA is the most which can be negotiated.
Were you to change your views as you go along about any of your red lines, we would of course be open to reconsidering the level of ambition, but time is very short… I think we have seen that film before.
(And incidentally, they did indeed say that – repeatedly. Repeatedly also making clear that the offer, which was equally repeatedly publicly welcomed by key members of the ERG, applied only to Great Britain, not to the whole U.K. That is precisely what has eventually led us to the different economic deal for Northern Ireland. The ERG were only ever fairweather friends to the DUP: their fundamental objectives differ greatly.)
On that basis, they will say, you will note there is nothing in our negotiating mandate on services, financial or other. Because you have made clear you do not want it, and want the regulatory autonomy to diverge. Your choice.
We therefore will, autonomously at 27, make a judgment as to whether we can apply our existing equivalence regimes in financial services for third countries to you. But this is a matter for us alone, not negotiation with you. And you are not getting special treatment.
The same applies on data. ( A much bigger issue than tariffs, for much of corporate Britain.) We shall decide autonomously at 27 whether your existing data protection legislation warrants an adequacy determination under the General Data Protection legislation, on the same basis as we have accorded it to other third countries. That’s not up for negotiation with you, so it’s not in the mandate.
On free movement, we note that you still intend to end it. And the corollary of that, given the indivisible then of the four freedoms which underpin the Single Market, and your clear views on the role of a supranational Court, is that the benefits of the other 3 freedoms do not apply to you, and that market access for your firms, on both goods and services, is seriously impacted. Your choice, not ours.
On some other issues—from aviation to road haulage, these are not for this agreement and not for now. Sure, we shall get round to an Open Skies Agreement on aviation with you—as one bloc of 27, and not individually. But it won’t contain the 9 freedoms of the Single European Skies deal, so it will pose major problems of ownership structure for British Airways, for example, as it will not go beyond the first 4 freedoms in aviation.
On goods, then, we note you want zero tariffs and zero quotas across the board. And we are open to that.
But just a few points you Brits need to understand here.
First: It’s obviously your sovereign right not to align in industrial sectors, which the previous Prime Minister said she intended to—and others, like the Swiss, who want better access to our market, do.
(To be clear, the words “as close as possible relationship in goods” inserted by Mrs May in the Political Declaration were deliberately removed at the request of Mr Johnson. As I say, he wants divergence, not alignment.)
But it’s our sovereign right to set the rules under which firms can export into our market, and we are not changing those rules just because you have left.
So, let’s take chemicals as one example (there are legions more): the third country rules under REACH (the Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation) are going to apply to you unaltered.
So your exporters will have to find an importer in the 27 who is prepared to take responsibility that their products meet EU requirements; because EU rules will be unenforceable directly in the UK. They will have to make 2 filings, one with our Regulator, one with yours, even if the rules remain precisely the same. And those filings are seriously complex. But that again was your choice, guys: you can’t live with supranational jurisdiction, remember. This disadvantages UK firms, and encourages them to relocate plants, but tough. And over time, if your regulatory decisions and ours diverge, that’s also just tough I am afraid: you want market access, you meet our rules.
Second: you are a big, competitive and geographically close market, so if you want zero tariffs and zero quotas to continue—and that’s better than any other non-member gets—we aren’t going to agree that without formal Trade Treaty agreements about not undercutting and dumping.
And that’s real Treaty-based conditionality we demand, in the form of dynamically aligning with our rules if you want fuller market access than other non member trading partners: on food standards (you can forget much access to our market for your agricultural products if you shift to US standards), on subsidies to industry, on energy (there won’t be a deal with us at all without a corresponding one on climate policy, committing to a carbon pricing level in line with ours on an ongoing basis), on environmental and social regulations.
Third: fish. We just won’t do zero/zero deal at all unless we sort out a fisheries deal as part of the trade deal, which protects our boats’ access to your waters and replicates what we currently get on fish stocks and catches. And because your fish processing industry relies very largely on exporting into our market, if we do not give you duty free access, we can probably close a large chunk of your industry down. But you can forget any chance of a zero/zero trade deal flying in the Parliaments of our fishing member states, unless we sort this.
Now, let’s be clear. These are negotiating positions. And you stick them in print—early—in your mandate partly to demonstrate to the other side you are serious and have precious little room for manoeuvre. It’s called trade negotiations.